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Ten Essentials of Ten Essentials of
Treasury Technology Treasury TechnologyWindy City 2009
Proprietary & Confidential
Strategic Treasurer, Craig JefferyApril 2009
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Topic Benefit & Description
Benefits: Understanding
how
to
select
treasury
technology
based on a specific needs and avoiding the common pitfalls.
Description:Rapid change, huge opportunities and dissatisfaction with the gap between promises made and the actual delivery are three descriptors of the current Treasury tech
environment.
To be successful with technology, treasury professionals must understand the tech landscape, understand how to identify their needs and properly match them up with providers.
That
is just the first step.
An effective implementation needs to be both well managed and seen as a process not an event.
Building the capabilities
out to support your efforts to achieve your strategic vision
requires intelligence,
perseverance
and
the
treasurers
10
essentials.
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Context: Treasury Landscape and Trends
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Five Treasury Technology Trends
1. Data Outsourcing Reaching Critical Mass
Data access/management is being outsourced in key areas
SWIFT and Consolidators
2. Technology
and
Economics/
IT
Support
Technology and economics: Lease vs. License, SaaS/ASP domination in various sectors
Visibility Risk
Liquidity
3. New Players and Best of Breed Emerging
New Players. Entering TWS Market at TWS Cash/Mid Level
Best of Breed Facilitation: Partnerships Between Risk / Trading / TWS: WSS and Reval
FAS 133 Add On; FXall
and various TWS
4. Bank Focus
Mergers and credit issues causing a lull in the vendor acquisition market
Enriching the service, working capital and efficiency
5. Risk Management and Visibility Tools
Back on the menu at the topProprietary & Confidential
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Technology Landscape: TWS & Risk
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Technology Systems Landscape View
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Technology Decisions
Technology must support and enhance the business process and underlying needs
Choices include:
Build
Buy
Buy and Configure
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Selection Process
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A Phased Approach
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Ten Essentials
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Ten Essentials for the Woods
Compass Bug SprayMatches Sunscreen Map
Flashlight Rain Gear water First Aid Kit Extra Clothes
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10 Essentials of Treasury Technology1.
Know Your Destination. Vision, Mission and Strategy.
2.
Understand the Landscape. Before venturing out.
3.
Assessment . Assess your processes, technology and information first.
4.
Future State. Define your future state and determine the current gaps that exist.
5.
Critical Needs Document.
Identify your organizations needs and wants in a formal manner.
6.
Treasury Information Map. Define current and future information flows and services.
7.
Deliberate Selection Process.
For processes, technology and information.
8.
Resource the Project Appropriately. Be realistic with internal resources. Use external resources wisely (design, plan, implementation, testing).
9.
Project Management. Formal PM and project reporting and communication.
10.
Justify The Project Before and After . What is essential as you justify your treasury technology project
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Ten Essentials for Treasury Technology
Understand The Landscape
Justify The Project
Deliberate Selection Process
TreasuryInformation Map
Know Your Destination Assessment
Resource The project
Critical Needs Document
Project Management
Future State
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1. Know Your Destination
Vision & Mission
Where are you trying to go?
Anyone know a good ..?
What are you trying to accomplish? Copyrighted illustration contracted for by StrategicTreasurer and created by MEG Illustrations
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2. Understand the Landscape
Saves time and shortens the list of who you
need to consider
The usual suspects
comment
Knowing the general capabilities and shortcomings of the banks and technology providers
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3. Assessment: Perform One!
People
Structure
Processes
Involve multiple areas
Includes data
Technology
All done with the perspective of what are you trying to accomplish and the destination you seek.
Do NOT
buy
into
the
mindset
of
implement
first
and
then well fix it
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4. Future State: Ensure everyone can picture it clearly
All activity should move you
in that direction
Formal (written) is the only
real future
state
It should support the mission of the organization and of Treasury
And relate to your
aspirational vision statement
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5. Critical Needs Document
Broad requirements and working concepts
Business Goals
Access needs
People
Interfaces and connections (internal & external)
Technology Platform
Security
Services and outsourcing
Vendor Reputation
Implementation experience
Functionality Specifics within each area
TWS
Risk System
Trade Finance
Trading Platform
Account Management
Order to Collect
Order to Pay
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6. Treasury Information Map
What are you trying to accomplish?
Cash position? Risk Mgmt? Cash forecasting? Reconciliation? Exposures?
What data is needed?
Where is that data?
What format is it in?
How often and when?
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Data Needs Differ Between Setup andOngoing Management
Setup: Initial Data Needs
What information is needed to evaluate solutions?
What data is needed to perform the cost benefit analysis?
How can we get this data for both analysis and initial setup without damaging our internal relationships?
How can we ensure we have complete and accurate data for analysis?
How can we reuse this data for analysis and setup within the system (s) we implement?
Ongoing Management
What output/input
is
needed?
Where does the data reside?
How will you access the data?
How can this gathering of data be automated?
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Data Needs: Setup & Ongoing Management
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Data as a Necessity
Proprietary & Confidential
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7. Deliberate Selection Process
Vendor Short List based on your CND
RFP with relevant questions
Demonstration
with your data
Due diligence
Include vendor and system position and trends
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8. Resource the Project Appropriately
Dedicated resources vs. part time
A never ending project
OJT or
Experience?
Internal only or external assistance
Do you want to pay consultants to learn on your time?
Is it appropriate from a risk and cost standpoint to use the project to learn everything on your own?
One time activities
Design
Static/Referential Data
Connections
Testing Documentation
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9. Establish Strong Project and ChangeManagement
Set realistic targets
Provide specific target dates
Ensure Accountability
Results, Time, and Budget
Reporting dashboard
Communication
Others need to know where you are going and why?
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10. Justify The Project Before and After
What is essential as you justify your treasury technology project?
Is it all about the cost benefit analysis? Hard dollar savings?
How it fits with your strategy and helps you fulfill your mission?
The risks it helps you mitigate and avoid?
What area should not be shortchanged in your justification?
Before and after!
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Ten Essentials for the Woods
Understand The Landscape
Justify The Project
Deliberate Selection Process
TreasuryInformation Map
Know Your Destination Assessment
Resource The project
Critical Needs Document
Project Management
Future State
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Case Study:
Results:
Hit rate improved:
>5% assignment
>12% application
Electronic adoption:
Increased the number via a campaign
Continue to market
and increase the numbers
Converting to ACH saves costs
DSO improvements
7 day decrease for electronic customers
~2.8 days overall
>$30mm of working capital freed up
Accounts Receivable Process$2-10B Publicly Traded Firm
Situation:
Firm wanted to improve the overall process of managing the cash application process
The hit rate was too low (assignment and application)
Amount of electronic items was too low (payments, orders, billing)
Need to improve DSO from 42 days (paper)
Actions:
Review . Reviewed the Order to Collect process and selected four areas of improvement.
Communication . Push for electronic ordering, shipping, billing and payment with goals and tracking of progress.
Optimized. Cash application algorithms and process modified to improve hit rates and accuracy.
Feedback. Developed feedback process to identify and
fix errors systematically.
UPIC. Established account that would eliminate future client impact for ACH remittances.
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Case Study:
Results:
Improve financial performance:
Removed
many
POs
from
the system with Pcard
Rebate growth
Discounts taken when appropriate
Payment
creation
process
less costly
Electronic adoption:
Increased the number via a campaign and ongoing
work (from
50%
in the first two months
Converting to ACH saves transaction costs
Improved Resiliency
Outsourced payments provided daily payments, faster and with scalability
Accounts Payable Process$2-10B Publicly Traded Firm
Situation:
Firm needed to manage working capital and the payable process more effectively
Paying some vendors early (shown by audit)
Process was too long which caused discounts to be missed
Volumes were growing rapidly and organization under pressure to hold staffing levels flat
Actions:
Established Pcard Program . Established purchasing card program eliminating many POs, added rebates.
Implemented Integrated Payment Files . Payment files sent electronically for all payment types.
Formalized Vendor Master Audit. Audit vendor master records &missed/taken discounts.
Activated P2E Process. Marketed the move to
electronic payments via multiple methods.
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Case Study: Treasury Processes$2-10B Private Firm
Situation:
Seeking to become a publicly traded firm, they decided they needed to reduce exposures and strengthen their treasury processes
Numerous systems existed that were sub optimized and in some cases without coordination
TWS was being sunset and not used properly
Many manual /excel driven processes and tracking
Actions:
Redesigned Bank Structure . To reflect relationships and current needs.
Designed Treasury Information Map . To simplify the financial processes.
Selected TWS and Reconciliation Vendors. To manage visibility and tracking (TWS) and to ensure timely and accurate controls (Recon and compliance
with policies).
Results:
Better Visibility:
TWS allowed faster access to information and specific abilities to distribute information
Positive and negative triggers/alerts across many parameters
Reconciliation system enforces active management through workflow management
Implementation:
Implemented the TWS with a few months
Improved Data Use
Lowered information costs by single pulls that were reused
Tighter integration and better reconciliation
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Case Study:
Results:
Less bank systems:
Eliminated a redundant bank system
Efficiency and DR:
Gained efficiency by having better backup and integration with wires in the TWS
Team work:
Great teamwork and cross pollination between external and internal staff
Spin off successful:
Effectively managed the spin off that
occurred
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Practical Advice.Trusted Solutions.
Measurable Results.
Craig A. Jeffery, AAP, CCM, FLMI
Managing PartnerPhone:
678.466.2222Cell:
678.641 1970Fax:
770.216 1547Email:
Office Address (Atlanta):STRATEGIC TREASURER LLC500 Westpark Drive, Suite 110Peachtree City, GA 30269
Website: www.strategictreasurer.com
Proprietary & Confidential
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